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How Employers Can Negotiate the ‘Money Talk’ and Win

Members may download one copy of our sample forms and templates for your personal use within your organization. Please note that all such forms and policies should be reviewed by your legal counsel for compliance with applicable law, and should be modified to suit your organization’s culture, industry, and practices. Neither members nor non-members may reproduce such samples in any other way (e.g., to republish in a book or use for a commercial purpose) without SHRM’s permission. To request permission for specific items, click on the “reuse permissions” button on the page where you find the item.

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Salary negotiations with job candidates can make or break the hire. The “money talk” can embolden a candidate, or depress him or her. It can leave the employer excited about a new hire, or regretful over a lost candidate at a crucial moment in the hiring process.

“It matters because the success of the placement hinges on getting this right,” said Amy Ala, a Seattle-based recruiter at Microsoft. “Everything else could be great, but the money conversation can sabotage the final decision.”

Negotiating salary can be “either the most fun part or the most ulcer-inducing part” of her job, Ala said. “There are three parties that should come out of the salary negotiation feeling good: the candidate, the hiring manager and the recruiter. We should all come out of this process feeling … like we did a good job, made a great placement and hired the right candidate,” she said.

It is likely that there won’t be much wiggle room on the salary range, said Susan Heathfield, a management and organization development consultant based in Lansing, Mich., who specializes in HR issues. In addition to the company’s range, other key factors determining salary requirements may include market pay ranges, the level of the position and how badly the company needs the candidate’s skills, Heathfield said.

The fundamental question to ask, she said, is: “How badly do you need this candidate?”

“If you are too needy, your salary negotiation strategy will quickly turn into a capitulation. And capitulation—paying more than you can afford, paying disproportionately to the pay ranges of your current employees, and paying a new employee salary and benefits outside of your comfort zone—is bad for the employer and bad for the candidate.”

Finding the Right Time

When is the right time to talk salary? “This is a challenge. It’s a little like going on a first date and asking about ring size,” Ala said. She added that she understands a candidate’s reticence to discuss salary right away, but she recommends laying the groundwork during the first telephone call.

Rachelle Falls, a Phoenix-based tech recruiter and founder of Sun Strategies, a consulting firm focused on candidate engagement across social platforms, cautioned that avoiding salary discussions during the initial phone screening could lead to a waste of time for the company and the candidate. “Making the right match is important, but being up-front with salary will save you time and effort and even disappointment in the long run. The only time you lose is when you’re not transparent about the role or budget,” said Falls.

Ala stressed that there are certain points when salary absolutely must be discussed. “Very few recruiters are willing to enter [a] discussion with the hiring team without vetting the salary question. By that stage, we need to have a better understanding of salary expectations,” she said.

An employer that fails to discuss salary early runs the risk of a candidate blindsiding it with a figure that’s too high, Heathfield said.

Dealing with Pushback

You’ll have pushback, more often than not, from some candidates who decline to reveal their current salary and hold out for the employer’s strongest offer, Ala said.

“What’s often happening here is the candidate is reluctant to show their cards too early in the process and limit their earning potential at the onset,” Falls said. “If they’re unwilling to share a number or even a range, explain that in order to get the best possible offer, you need a starting point. Without anything to work with, the hiring team will be less likely to prepare an offer that will adequately reflect the candidate’s worth. So, tell me what you’re worth, what you need and what you believe is a deal-breaker.”

The whole idea of who brings up the salary discussion first is ridiculous, Ala said. “It doesn’t matter who goes first. This is not a ‘gotcha!’ scenario. If it puts the candidate at ease, go first, discuss ranges and see how that feels.” She said that early on, she will give a very conservative estimate so that by the time an offer is actually made, “it’s more than the candidate expected and hoped for.”

Heathfield advised HR to make every effort to identify the candidate’s most recent compensation and benefits. Failing that, Ala recommended an oblique approach: taking the candidate’s salary out of the equation and instead talking about the market rate for that particular job. “When you take their paycheck off the table, you can have a more general conversation and it becomes easier. Then you can start developing range ideas for what they want.”

Ala also recommended taking time to educate candidates about the total rewards the company offers. “If you work for an employer that offers more than a base salary, that has to be covered as well. Long-term comp, stock options, cash bonuses, benefits, relocation expenses, all kinds of things can factor into overall rewards.” Superior candidates will negotiate with you in these areas anyway, so HR must be prepared, Heathfield said.

Some recruiters won’t allow candidates to go through the interview process if they don’t reveal their latest salary. “If you can’t move forward, explain with empathy that ‘We can’t move ahead, because the employer needs to know this before we move forward.’ ”

Heathfield advised that recruiters hold their ground even with high-potential candidates. “Most organizations have limits. You will regret violating your limits. Even if you have to start your recruitment over, you will save yourself years of headaches and prohibitive costs.”

Closing

You’re ready to close—you’ve agreed on a number and the candidate is ready to take the job—but sometimes, the candidate has reset his or her expectations after talking with family members, advisors or other recruiters. “You must ask the question, ‘Has anything changed since we last talked?’ ” Ala said. “There may be another job conversation going on that you have no control over.” In that case, she advised talking though it, and being prepared to consult with the hiring managers to see if they’re willing to meet a new salary level.

“Candid money conversations with the hiring manager throughout the process are very important,” Falls said. “Discuss scenarios where a higher salary might be appropriate or if a signing bonus will help close the deal.”

Members may download one copy of our sample forms and templates for your personal use within your organization. Please note that all such forms and policies should be reviewed by your legal counsel for compliance with applicable law, and should be modified to suit your organization’s culture, industry, and practices. Neither members nor non-members may reproduce such samples in any other way (e.g., to republish in a book or use for a commercial purpose) without SHRM’s permission. To request permission for specific items, click on the “reuse permissions” button on the page where you find the item.